Public company filings are one of the primary tools that shareholders use to understand the companies they are invested in. They are particularly relevant when it comes time to vote at the company’s annual shareholder meeting. 

The majority of institutional investors vote their shares in advance of the meeting, filling out a form that allows their votes to be registered by proxy. This practice is why many of the regulations for public company meetings are referred to as “proxy rules”, and why the filings that companies are required to disclose includes a “proxy card” and “proxy statement” in advance of the event. 

In some cases, everything that shareholders need to know in order to vote and participate at the annual meeting is included within the proxy statement. This is typically the case for U.S. companies. However, in some markets, key information such as director biographical details or board reports on governance, compensation, environmental and social issues may be disclosed separately, typically in an annual report or management information circular.  

For U.S. companies, the two most important documents are the DEF14A, which is the proxy statement, and the Form 10-K, the company’s annual report. In most other markets, shareholders look for the notice of meeting, which includes the proxy card, and annual report (or management information circular). And in a few countries, like Italy and Belgium, sections that typically appear in the annual report are instead published separately as standalone reports, forcing shareholders to review hundreds of pages of filings across four, five, even six or more documents. 

Proxy Statement and Notice of Meeting 

Meeting materials are heavy on the details: 

  • When and where is the meeting?  
  • Will it be held in person, virtually, or in a hybrid format? 
  • Who is eligible to attend and vote?  
  • How can they vote?  
  • What is on the agenda?  
  • How are the votes being conducted?  
  • What are the approval thresholds for each proposal?   

Most of this information is included in the proxy card, which serves as the actual voting ballot, and the proxy statement; these documents are often bundled and distributed together. However, the most informative aspects of the meeting materials may not be the details themselves, but instead the surrounding context that the company provides (or leaves out).  

The actual text of the proposals, featuring formal parliamentary language and extensive references to provisions and sub-provisions of the company’s articles, can be dense verging on impenetrable. Whether incorporated in the agenda itself, or disclosed as part of a supplementary notes sub-section, explanatory commentary on each proposal helps shareholders understand what is happening at the meeting, and why it is happening. Clear and comprehensive explanatory notes can head off questions at the meeting itself, and potentially even voting opposition. 

Annual Report 

The purpose of the annual report is to provide a comprehensive picture of the company as of the end of the past fiscal year. An annual report typically includes: 

  • An overall and segmented overview of the business, and a rundown of outstanding legal issues and potential risk factors 
  • Biographical details of the board and executive team, and discussion about the board’s composition, including a skills matrix
  • Increasingly, investors are looking for (and some regulators and indices are requiring disclosure of) information about board and management diversity
  • Reports from the executive team on strategic outlook and financial performance
  • Reports from the board on its activities and oversight during the year
  • Often incorporates a report on executive compensation, and may also cover corporate social responsibility, sustainability and climate issues, and other environmental, social and governance (ESG) topics
  • The company’s audited financial results, including an income statement and balance sheet, along with a report from the auditor and explanations of the assumptions and accounting methodologies employed

While the financial statements are always included, many other sections (along with the overall format and tone) can vary from market to market — in some cases, the document is strictly a regulatory filing following a standardized template, whereas in others it can serve a marketing function, with a glossy design and colourful pictures.  

As such, while the annual report provides an overall sense of where the company stands and where it intends to go, its relevance to proxy voting can vary from country to country, or even company to company. For example, in the United States, shareholders interested in a company’s executive compensation, director independence, or external accounting service fees may find these disclosures in their annual report or in their proxy statement; most companies choose to include them in the proxy statement, rather than the annual report. 

Moreover, it’s a snapshot of the company as of the end of the past fiscal year. Investors may need to check the proxy statement, quarterly filings, or even the company’s website to get the most up to date information in the run-up to the meeting. 

Timing 

These filings must be distributed to eligible shareholders and made publicly and freely available in advance of the annual shareholder meeting. U.S. companies have the option of delivering physical copies to shareholders or delivering the documents electronically under the “notice only” option. Most companies opt for the notice only option, which results in the electronic documents being distributed and filed on both the SEC’s online filing system, EDGAR, and one additional website (usually the company’s own website) at least 40 days before the meeting. Timing requirements vary for other markets and can be as low as 20 days before the meeting, however a minimum of 30 days is considered best practice. Not only do investors need the opportunity to review the information and consider their vote decisions, but with most votes cast by proxy, it takes time for meeting agendas, ballots, and the votes themselves to make their way up and down the custodial chain. 

Conclusion 

In whatever format they are released, these disclosures are key to shareholders’ understanding of the companies they are invested in. When it comes time for the company’s annual meeting, they serve as the basis on which shareholders will form their proxy voting decisions. As such, it is crucial that public company filings be accessible, concise and transparent, avoiding boilerplate language and excessive jargon wherever possible, and released far enough in advance of the meeting to be thoroughly digested.